In the end of the first semester of 2005, agroindustry registered growth of 0.3%, a figure extremely inferior to that of the average Brazilian industry (5.0%)...

In the end of the first semester of 2005,  agroindustry registered growth of 0.3%, a figure extremely inferior to that of the average Brazilian industry (5.0%) in the same period. The same happened in 2004,  when the general industry registered 8.3%, and groindustry, 5.3%. In the first semester, livestock (2.5%)  had a better performance than agriculture (-0.7%), thus representing a more  relevant contribution to agroindustry. The subsector of insecticides, herbicides and agricultural defensives expanded by 2.4%. The little change ( 0.3%) in the indicator accumulated in the first semester was a consequence of two quarters characterized by opposite result: the first semester presented retraction of 3.5%, whereas the second one presented growth of 3.3%.

The results for agroindustry in the first semester are a consequence of an unfavorable conjuncture, mainly in the subsectors related to agriculture. These subsector were affected by the folowing factors: reduction of international prices of some commodities; increased production costs; more selective and more expensive credit; and  delayed exchange, which prevented an even higher expansion of exports. Besides, due to the dry climate in the central-southern part of the country, there was a reduced harvest of some specific crops, as shown  the Systematic Survey of Agricultural Production (LSPA) of June. A volume of 113.7 million tons of grains is estimated for this year. This figure is 4.7% inferior to that obtained in 2004 (119.4 million tons). The fall of the group of products used in agriculture (-23.1%) was the major responsible for the low performance of agroindustry in the first semester of this year. This subsector suffered the negative impacts caused by the reduction of agricultural profitability and by the increase of production costs, especially due to the rise in the prices of petroleum prices, a basic input to the production of fertilizers, and of steel, used in the production of machinery and agricultural equipment.

On the other hand, the subsectors related to livestock are still benefiting from the good performance of exports of bovine meat, swine meat and chicken; and from the acquistion of new markets, due to the good quality of Brazilain products, and to the sanitation crises, as the Mad Cow Disease, which affected cattle in the United States and in Europe; and of the Avian Influenza, which affected  China and other important producers in Southeast Asia.

According to statistics of the Secretary of External Commerce (SECEX/MDIC), in the period Jan-Jun this year, in relation to the same period in 2004, the exported volume of some agroindustrial products presented the following results: poultry pieces (23.1%), frozen bovine meat (37.6%), fresh or cooled bovine meat (11.0%), frozen swine meat (20.6%), sugarcane sugar (59.5%), cellulose (14.1%), tobacco (12.7%), alcohol (13.6%) and sawed wood (2.9%). Nonetheless, soybens derivatives, some of the most important items in terms of Brazilain exports, showed weak performance: crude soybeans oil (-2.9%), crushed soybeans (-1.5%) and bagasse and other residues from the extraction of soybeans oil (0.8%).

Industrial Agricultural Products

The sector of agricultural products, in the first semester oif 2005, presented growth of 3.4%. Among the four subsectors which expanded their production, the highlight is sugarcane derivatives (26.7%), reflecting the great internal demand of fuels for biofuel cars (flex fuel), and the increase of exports of sugar and alcohol, increased due to good international prices. It is also worth mentioning cellulose (3.7%), rice (5.2%) and soybeans (1.3%). Soybeans, despite the fall of international prices, caused mainly by the successful American harvest, remains as one of the main products exported by the country. On the contrary, the major fall came from corn (-25.4%), and similar results were observed for  tobacco (-3.9%), wheat (-0.3%) and oranges (-15.8%).

Industrial Products Used in Agriculture

The subsector of industrial products used in agriculture fell by 23.1% in terms of the indicator accumulated in the year up to June, a rate inferior to that registered in the end of 2004 (1.1%) and of 2003 (11.9%). The subsectors of fertilizers (-143%) and of machinery and equipment (-36.3%), faced retraction in production , due to the decrease of agricultural profitability, caused by a group of factors: reduction of prices of important agricultural products in the international market (mainly soybeans); delayed exchange; increased production costs; debts of farmers; and more expenxive and restricted credit. The increased costs of the production of fertilizers occurred, mainly, because of the high prices of petroleum, basic input for their production. The rise in the price of steel, however, altered the production costs of machinery and equipment, whose external sales did not repeat the good performasnce of last year. According to the National Association of Producers of Automotive Vehicles (ANFAVEA), the number of harvesting mchines exported in the first semester of the year, in comparison with the same period in 2004, was 25.3% lower.

Livestock Industrial Products

In the first semester of 2005, the subsector of livestock industrial products grew by 2.8%, reflecting advance in all subsectors, except leather and skins (-2.1%). The group of bovine and swine derivatives, affected by exports, showed expansion of 3.1%, due to the acceptance of Brazilian products in foreign markets. This results is a consequence of marketing startegies aimed at selling Brazilain meat abroad, which were successful also because of the Mad Cow Disease which affected cattle in The USA and in Europe. Nowadays, Brazil leads the ranking of external sales of bovine meat and is the fourth major exporter of swine meat in the world. The subsector of poultry derivatives (3.0%), also stimulated by exports, keeps dynamic,with Brazil as the main exporter in the world. Besides the quality of the national product, the exports of chicken were benefited by the Avain Influenza which affected the Asian industry. The subsector of milk, mailly directed to the internal market, also showed expansion (3.1%).

Industrial Products Used in Livestock

The sector of industrial products used in livestock had an increase of 1.3%, in this first semester of  2005. This growth occurred due to the subsector of animal food (5.8%), most influential, once veterinary products fell by 18.2%.

In summary, the figures for the agroindustrial sector in the first half of the 2005 (0.3%) showed a performance below the levesl registered for the overall production (5.0%), mainly because of the reduction of the agricultural investment and the consumption of fertilizers. Besides these factors, climatic problems also contributed to the performance of agroindustry.  A positive aspect, however, was  the reversion of rates observed from the first (-3.5%) to the second quarter of 2005 (3.3%).